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The high bar for implied arbitration clauses

London

In Lisnave Estaleiros Navais v Chemikalien Seetransport the High Court considered whether an arbitration clause in one agreement can be implied into another closely related agreement between the same parties. The judge stressed that the crucial requirement for any implied term was always that of intention, and not reasonableness of the terms in consideration.

In this case the judge applied the standard 'officious bystander' test where a term will be implied if it is so obviously intended that if you asked the parties they would cry "oh of course". This test looks to 'necessity' or 'obviousness' of intent which can be found from a course of dealing. On the facts no existing intent could be shown, and the most that could be said was that if the parties had been asked about it, it is likely that they would have agreed to it being included.

Although it is not ground-breaking, this case serves as a useful reminder of the courts' strict application surrounding implied terms. Even where there is a relatively clear course of dealing on a particular set of terms, any agreement closely relating to those terms will still need to expressly incorporate them to be certain they apply.